Bt cotton seed price cut 7.5%, trait value by 20%

Two years after it imposed price controls on the widely-used Bollgard II variety of Bt cotton seeds and slashed the trait value (royalty) payable to the technology provider US-based Monsanto, the government has now reduced the seed’s maximum sale price (MSP) in the retail market and the trait value further.

New Delhi |
Published: March 14, 2018 1:59 AM

Curiously, the local seed companies, which had welcomed the capping of seed prices in 2016, has now found the latest move crippling their profitability. (PTI)

Two years after it imposed price controls on the widely-used Bollgard II variety of Bt cotton seeds and slashed the trait value (royalty) payable to the technology provider US-based Monsanto, the government has now reduced the seed’s maximum sale price (MSP) in the retail market and the trait value further. According to a notification issued late Monday by the agriculture ministry, the MSP for the Bt cotton seeds in the 2018-19 kharif season will be Rs 740 for a 450-gm packet, down 7.5% from earlier. The trait value has seen a steeper 20% cut to Rs 39/packet. Before the Centre capped retail price of the Bt cotton seed, its price was in the range of Rs 830-1,000/450-gram packet, as existed in 2015-16 kharif season. While the price was capped at Rs 800/packet in March 2016 through a controversial move, trait fee, a component of it, was slashed 74%. The price-control has resulted in a sharp reduction in the royalty received by Mahyco Monsanto Biotech (MMBL), the India-incorporated firm, which has sub-licensed the Bt cotton seed technology to as many as 50 domestic seed companies since 2002. While the trait value was around 20% of the retail price before the price control was imposed, it reduced sharply to 6% due to the March-2016 move and, further to just 5.2% after Monday’s decision.

While the Delhi high court is hearing a petition filed by MMBL against the government’s move, a company spokesperson said on Tuesday: “The technology was introduced in India and broadly licensed by the technology provider to seed companies through mutually agreed-upon private contracts. However, the Cotton Seed Price Control Order (CSPCO) was issued in 2015 against the backdrop of a bilateral dispute, in which a few licensee seed companies withheld from MMB contractually agreed-upon fees. These fees were less than 1.5% of the cost of cultivation for farmers. It is unfortunate that (the latest) order further erodes trait fees, which are now less than 0.5% of the cost of cultivation, while the technology continues to provide value to farmers across India.” About 90% of the country’s cotton area of 12.26 million hectare in the 2017-18 season was under Bt cover. The country’s cotton production has risen manifold since the introduction of Bt seeds — from 13.6 million bales in 2002-03 to a projected 33.92 million bales in 2017-18 crop year (July-June). Each bale weights 170 kg.

Curiously, the local seed companies, which had welcomed the capping of seed prices in 2016, has now found the latest move crippling their profitability. “From 2011 the seed value (sans trait fee) per 450-gm packet (has been) gradually brought down…In the last six years, the seed industry has seen huge increase in labour cost, supply chain cost, electricity/fuel cost and so, practically there’s no business margin left to continue cotton seed production any more,” said Kalyan Goswami, director general of National Seed Association of India (NSAI). Goswami said that NSAI had in fact sought Rs 150/packet increase in seed price to sustain in Bt cotton business. “The new low price would definitely impact seed supply and availability next year,” he said.